Month: April 2016

Why is AirBnB evil? According to Vancouver

Oleg Articles, News, Opinion

 

Lately, there has been a lot of debate about AirBnB. Is AirBnB legal? Should it be allowed? Does it effect real estate prices? Does it effect rental rates? Is it a good investment strategy for landlords? All are good questions. In this article I will attempt to answer some of them. Keep in mind I don’t have any preferences for or against AirBnB. I am simply trying to give you some facts and explanations as to why Vancouverites might be against AirBnB.

Is AirBnB legal in Vancouver?

No, according to the bylaws imposed by the City of Vancouver – AirBnB is not allowed. However, this city bylaw is virtually impossible to impose and there hasn’t been any cases (as far as I know) of the City penalizing anyone…yet

Does AirBnB cause rental rates to go up?

Yes, it does! Let’s say you have 1,000 unfurnished long term rental units. Suppose 20% of the landlords decide to rent out their units on short term rentals with AirBnB instead of keeping them as unfurnished long term rentals. All of the sudden the demand for the remaining 800 units increases and the rent rate goes up.

 Does AirBnB effect real estate prices?

There is no definitive answer to this question. AirBnB might effect real estate prices slightly. As the rental rates increase more investors are interested in buying real estate thus driving up the real estate prices.

Why are Stratas in Vancouver against AirBnB?

There are a few reasons why more and more Stratas are creating bylaws specifically against AirBnB and even going as far as monitoring the website for units within the building. Landlords caught advertising their units for rent on the website face penalties.

  1. Security. Many Stratas would argue that giving strangers access to the building is dangerous and makes some residents feel unsafe.
  2. Insurance. If you rent out your unit on AirBnB some insurance companies will not cover you. If your short term tenant off of AirBnB floods 3 floors below, you might be responsible to pay for the damages out of your own pocket. Some damages could cost hundreds of thousands of dollars. Stratas don’t like to take any chances.
  3. Noise. A lot of people that use AirBnB are in town on vacations and like to throw parties.
  4. Reduce quality of the building. Tenants in general don’t have a great reputation for taking care of the common properties such as hallways, party rooms, gyms and swimming pools. Stratas fear that short term tenants might be even more careless with the common property.
  5. Building bylaws. Every building has a set of rules and bylaws that everyone follows. Long term residents of the building know these rules and follow them (for the most part). Having new tenants in the building a few times a week makes it very hard to enforce any of these rules.

AirBnB is a new concept and like most new concepts causes a lot of controversy. It will be interesting to see what happens with AirBnB in Vancouver over the next few years and what effect it will have on local real estate as well as hotel industry. What are your thoughts on AirBnB in Vancouver?

Vancouver’s proposed affordable ownership program

Oleg Articles, For Buyers, News, Opinion
Vancouver skyline / new affordability program
JENNIFER GAUTHIER/METRO

Earlier this week City of Vancouver announced that it plans to create new affordability program for local residents. The purpose of the program is to address unaffordability issues in Vancouver BC. Specifically, Vancouver’s residents not being able to afford to purchase their first home due to rapid increase in the real estate prices.

If you feel skeptical about such program, you’re not alone. However, there are similar programs already in place in Calgary, Toronto and United Kingdom.

Don’t get too excited about the program just yet. To implement this program the city needs to secure permission from the province to change the Vancouver Charter. The Charter doesn’t necessarily prevent city from having a shared homeownership program. But the council is sticking with the motto – “better safe than sorry”.

How would the program work?

Details aren’t finalized, but the program would involve the city purchasing about 20 per cent of a units in a new development so the buyer – who would be subject to numerous restrictions – wouldn’t have as high of a down payment or mortgage payments. If the value of the property goes up upon sale of one of the unit in the “affordability program” City of Vancouver would receive it’s share of profits. If there are any remaining profits, these would be shared with the homeowner. It’s a win-win situation.

Who would qualify for the program?

  • Must be a resident of the city for a minimum of five years
  • Must be a permanent resident or citizen
  • Must never have owned property before (first time buyer)
  • Must be employed in Vancouver
  • Earn less than $67,540 per year for one-bedroom units (as a household)
  • Earn less than $96,170 per year for two and three bedroom units for people with children (as a household)
  • Must complete a home buyer education course

How many units will be available in the program?

The city aims to create 300 affordable units within the next 3 years. At least half the the available units will have two to three bedrooms. City officials said they might create a lottery system to see who gets to buy in. There are estimated 30,000 qualified households in Vancouver at the moment.

In my opinion it is fantastic the City of Vancouver is creating such programs. It is no secret that there are a lot of people that can’t afford to purchase their first condo in the city. With such programs we boost economy and help first time buyers. That’s why I love Canada, more specifically Vancouver! Where else will you find government care so much about people’s well being (outside of Toronto, Calgary and United Kingdom lol)?